Wicomico Debates Housing Payments

SALISBURY- An ongoing dispute over which Wicomico Housing Authority residences should make payments in lieu of taxes (PILOT) payments to the county and which should make similar payments to the various towns including Salisbury essentially ended this week after considerable debate when officials realized there was no hammer for collecting the payments at all.

The federally subsidized Housing Authority owns and operates 109 housing units in Wicomico, 19 of which are in the county at large with the others dispersed throughout its municipalities including Salisbury and Fruitland. While the residences are protected somewhat from paying property taxes to the county and its municipalities, a plan was put into place in the 1960s, when the federal Housing and Urban Development  department (HUD) began regulating affordable housing, for the properties to make payments in lieu of taxes, or PILOT, contributions to the jurisdictions in which they were located.

The system was in place in Wicomico County, and Salisbury and Fruitland, for several decades until a recent effort to waive the PILOT payments in order to maximize the efforts of the housing authority to find more opportunities. Essentially, the housing authority has been making payments to the county and its municipalities in lieu of property taxes in the form of a small percentage of what left over from the rent collected after expenses have been paid.

This week, Housing Authority attorney T.J. Maloney appeared before the Wicomico County Council seeking approval on an amendment to the PILOT program, returning it a system prior to 2009, when the program apparently jumped the track. According to Maloney, PILOT payments have been made in the form of checks to Wicomico County, which then redistributes the money to the municipalities in which the Housing Authority properties are located.

However, before the seemingly innocuous housekeeping measure could be approved, a debate broke out about the payment plan. Several on the council argued because all of the Housing Authority properties are located in the county, Wicomico should get a cut of all of the PILOT payments, while the towns of Salisbury and Fruitland, for example, should be paid only on those properties within their jurisdictions.

However, Maloney said the system has always separated the payments with the properties making PILOT payments to the jurisdictions in which they were located.

“We pay the county only for the properties in the county proper, and the municipalities for theirs,” he said. “That’s the way it’s always been done.”

The 109 Housing Authority properties across Wicomico are protected from paying property taxes because of the agency’s non-profit status, Maloney explained. Instead, the Housing Authority makes PILOT payments to the jurisdictions based on a percentage of the rent collected. If the properties are vacant, no PILOT payment is made to any jurisdiction.

However, some on the council wanted Wicomico to get paid for each of the 109 properties, not just the 19 located in the county at large. The county would then distribute the PILOT funds to the municipalities as necessary.

“That’s what everybody else does in Wicomico County,” said Councilman Joe Holloway. “If you live in Salisbury, you pay property taxes to Wicomico County and Wicomico makes the distribution.”

However, Maloney explained following the same procedure on PILOT payments would amount to a double dipping of sorts.

“In that way, the county would receive a payment for every Housing Authority property, while the towns would receive payments for only those within their jurisdictions,” he said. “We’re providing low income housing and we’re trying to get everything we can to continue to do that.”

The debate went back and forth for the better part of an hour before it was pointed out by Councilman Matt Holloway the discussion was likely moot because there was no hammer for the county against the Housing Authority properties to make any PILOT payments at all.

“These are all HUD-funded properties,” he said. “There is not authority for Wicomico to place liens on these properties or offer them for tax sales. We really have no authority on them at all. We should be happy we’re getting something.”

With that said, Maloney asked the council to consider waiving the PILOT payments for the Housing Authority properties from the years 2004 to 2009, when the new distribution system was put in place. Salisbury and Fruitland had already agreed to waive the payments, which don’t add up to much. For Wicomico, the waiver request amounts to $14,642, while Salisbury and Fruitland had agreed to waive over $24,000 each. In the meantime, county officials agreed to keep the current distribution system in place.

“They’ll do their computations and submit to us whatever they can or will,” said County Administrator Matt Creamer. “If they don’t pay us at all, there’s really nothing we can do about it.”

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